Says former production company entitled to 50% of digital music sales and not the 12% Universal Music had been giving it. Reverses previous ruling that digital music sales are the same as physical music sales, finding that music is “licensed” to digital music retailers and therefore covered by the much higher royalty split.
Record labels always complain that P2P is stealing money from artists and those who work hard to create the music that fans enjoy, but oftentimes it seems none works harder than they to cheat artists at every possible juncture.
We’ve already mentioned how artists make as little as $23.40 for every $1,000 in music sold after deducting the cost of everything from things like breakage to the cost of manufacturing and distributing the album.
Eminem’s former music production company F.B.T. Productions has been battling with Universal Music Group over what it thinks the royalty rate ought to be for digital music downloads on Apple’s iTunes.
Last year a jury found that he was entitled only to the lower rate of 12%, the standard amount for physical albums, and not the 50% artists receive when their work is licensed for use. F.B.T. recently appealed that decision, arguing that a digital download is not a physical sale, but rather a license on a master recording and should therefore fall under the “master license” provision.
A three-judge panel for the United States District Court for the Central District of California agreed, ruling that the contracts between the two were “unambiguous” in finding that the music is licensed when the master recording is used as is the case with Apple’s iTunes.
“On appeal, F.B.T. reasserts that the Masters Licensed provision unambiguously applies to permanent downloads and mastertones,” writes Judge Barry Silverman in the ruling. “We agree that the contracts are unambiguous and that the district court should have granted summary judgment to F.B.T. We therefore reverse the judgment and vacate the district court’s order awarding Aftermath its attorneys’ fees.”
He notes that the “Records Sold” provision of that agreement provides that
F.B.T. is to receive between 12% and 20% of the price of physical records sold, and that it is to receive 50% of net receipts for the use of master recordings “to others for their manufacture and sale of records or for any other uses.”
Being that Apple’s iTunes uses the master recordings to provide customers with permanent digital downloads the court found that F.B.T. is therefore entitled to 50% of royalties.
UMG insists the ruling won’t apply to other artists since it only concerns one specific recording agreement.
“Any assertion to the contrary is simply not true,” says UMG spokesperson Peter Lofrumento.
UMG plans to appeal.
Stay tuned.
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A terrible situation for the RIAA. They’ll be thinking now that there’s nothing worse then an artist ripping them off !! God forbid.